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Georgia man imprisoned for defrauding SilkRoad black market

crypto news The American Supreme Court Building blurry trading chart background bright neon color cyberpunk

crypto news The American Supreme Court Building blurry trading chart background bright neon color cyberpunk

James Zhong, a 32-year-old Georgia man, was sentenced to one year and one day in prison for defrauding the Silk Road dark web marketplace of approximately 50,000 bitcoin (BTC) in September 2012.

The United States attorney for the Southern District of New York, Damian Williams, announced the sentence imposed by United States District judge Paul G. Gardephe.

As part of the Zhong investigation, the government obtained final orders of forfeiture for over 51,680 bitcoin, which was valued at more than $3.4 billion at the time of seizure and over $1.57 billion today.

Williams stated that Zhong managed to conceal his fraudulent activities for 10 years using a bitcoin mixer, an overseas cryptocurrency exchange, and various technological tools. However, the federal government eventually uncovered Zhong’s scheme thanks to the persistent efforts of law enforcement.

Silk Road, an online “darknet” black market in operation between 2011 and 2013, was used by numerous drug dealers and other unlawful vendors to distribute illegal drugs and other illicit goods and services. Its founder, Ross Ulbricht, was convicted in 2015 and sentenced to life in prison.

Zhong executed his scheme by creating approximately nine Silk Road accounts to conceal his identity and triggering over 140 transactions in rapid succession, tricking the marketplace’s withdrawal-processing system into releasing approximately 50,000 bitcoin into his accounts.

The hacker then transferred the bitcoin into various separate addresses under his control to prevent detection and conceal the source.

In November 2021, law enforcement agents recovered approximately 50,491 bitcoin from Zhong’s Gainesville, Georgia, house, along with $661,900 in cash, 25 casascius coins (physical bitcoin), and 11.11 additional bitcoin.

Zhong voluntarily surrendered an additional 1,004 bitcoin in March 2022. The total value of all bitcoin seized is approximately $3.4 billion.

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